Latest news from the EU-FTT Front

At the today’s AGM of the German campaign the director of the tax department in the MoF, Mr. Sell, made a briefing.

Here are the main messages:

1. Austria had made an oral proposal for the further procedure of negotiations among the eleven. The core idea was: we take in a first step all derivatives as tax base, may be with lower tax rates, and then in a second step those, who want exceptions, would have to justify possible exceptions (so called „negative list approach“). All participants had accepted this approach.

2. Germany and Austria did not ask for exceptions, while France, Italy and Spain repeated their old arguments for exceptions as if nothing would have happened.

3. The ECB, but also the Deutsche Bundesbank and other central banks play a negative role in supporting exceptions. The ECB wants in particular interest rate derivatives excepted. These stand for the biggest turnover among all derivatives. Hence exempting them would be a heavy watering down.

4. Now, the negotiations at civil servant level are stalled again, and Sell said, that he would not know, how things would go on. France is protecting it’s Paris stock exchange which will be sold. The deal would turn too disadvantageous with the FTT.

5. The FTT task force in the German MoF is also trying to convince bilaterally their colleagues and would therefore be travelling a lot. But there is not really an impact.

6. We have to acknowledge that among the eleven there are few who are seriously committed to the FTT. Germany feels somehow „lonely.“

7. A breakthrough would only be possible through an agreement among ministers, if not top level between Merkel and Holland.

8. Sell did not know, whether Schäuble will make a move at the ECOFIN next week. It is possible but not for granted. In the first case we might have a new situation next week. In the latter the stagnation would continue.

9. If a political agreement would be reached, it would then take two years to get the project through the normal procedures of EU and national law making.

Our colleagues from the SPD in the parliament added the following:

1. Gabriel, SPD chairman and vice-chancellor, made clear to Schäuble, that a version of the French unilateral tax would be unacceptable for the SPD.

2.The SPD and her Austrian sister party have written a letter to the other social democratic parties in eleven countries with their position.

Our conclusion:

1. It is unlikely, that France will change substantially its position. Hollande is so lost, that he has nothing to lose and will not listen to any domestic critiques. The balance of power among the eleven and time is on his side.

2. Therefore it is not enough to stand firm on the ground of the Commissions proposal as Austria and Germany do. Germany must take an initiative, which offers incentives to France in other areas (fiscal pact, austerity) and make it compromise on the FTT. This is the only chance to get more than a clone of the French tax.

3. Apart from the already planned initiatives for the Day of Action, we try to get trade union and church leaders to propose such an initiative to Schäuble.

Therefore several letters will be sent and media be involved before the ECOFIN.